TMK Ipsco ships more OCTG as US drilling rises

North American pipemaker TMK Ipsco expects healthy energy market conditions to sustain consumption of oil country tubular goods (OCTG) through 2018 after growing its pipe shipments by 34pc in the first half of the year.

The Houston-based North American arm of Russian steelmaker TMK expects a "fundamentally strong oil price environment" to remain supportive of capital investment by energy producers, boosting OCTG demand.

"Demand for our core products, OCTG, is expected to remain strong, with customers requiring more sophisticated pipe solutions as well as premium connections to access more complex reserves," TMK chief executive Alexander Shiryaev said.

The weekly active drilling rig count in the US averaged 1,003 in the first half of 2018, up from 819 in the prior-year period, according to data from oil field services company Baker Hughes. The average price of West Texas Intermediate crude oil rose by more than 30pc over the same period to nearly $66/bl.

Stronger OCTG demand helped lift TMK Ipsco's pipe shipments in North America to 477,000t in the first half of 2018, a 34pc increase over the same period a year earlier.

OCTG-related shipments rose by 23pc to 339,000t in the first half. Shipments of seamless pipe inched up to 259,000t from 257,000t, while welded pipe shipments more than doubled to 218,000t.

The July 2017 restart of the company's Camanche, Iowa, and Catoosa, Oklahoma, facilities also helped boost welded pipe shipments on the year. The company renewed operations at the plants amid increased OCTG demand after idling them in 2015.

In the second quarter, Ipsco's total shipments ticked up to 247,000t from 203,000t in the prior-year quarter. Seamless pipe shipments were flat at 138,000t, while welded pipe shipments rose to 109,000t from 65,000t. OCTG-related shipments rose to 182,000t from 159,000t.

Shipments also ticked up in the first half of 2018 in the company's Russian and European divisions.

In Russia, OCTG shipments increased by 6pc to 613,000t, boosting total shipments to 1.5mn t from 1.4mn t. Shipments in Europe, where the company produces seamless pipe, rose to 100,000t from 95,000t.

These increases helped lift TMK's total pipe shipments across the group by 14pc to 2.1mn t in the first half of the year from a year earlier. OCTG-related shipments rose by 11pc to 952,000t.

TMK in February halted the initial public offering of its North American arm launched in January under the name Ipsco Tubulars in response to a sharp drop in US equity markets. The company in March filed amended documents with the US Securities and Exchange Commission (SEC) to relaunch the IPO, but said the number of shares to be offered and the price range for the proposed offering had not yet been determined.

TMK Ipsco produces welded and seamless pipe and connections for the oil and gas industry. The company operates 12 facilities in the US and Canada, including an electric arc furnace in Koppel, Pennsylvania, with an estimated annual billet production capacity of 600,000 short tons.

Ipsco Tubulars' parent company TMK operates 27 pipe manufacturing plants in Russia, Europe and the Middle East, in addition to North America.